Energy Management Systems: How to Maximize ROIJuly 10th, 2011 | Posted by in Uncategorized
Washington D.C. – Energy Management Systems (EMS) are becoming more and more commonplace in both convenience and grocery stores. The promise of reduced energy consumption and costs coupled with a desire to go green is driving leading retailers to try out new EMS offerings across their networks. Kwik Trip, Stripes and Green Valley are among the early adopters benefiting from new EMS technologies targeted at c-stores. Supermarket News reports of similar enthusiasm among forward-thinking grocers.
How do Energy Management Systems Work?
Second to labor, energy consumption is typically one of the biggest variable costs for many retailers. Expenses in this category include electricity consumed by lighting, HVAC systems and store fans, refrigerators and coolers, water heating, POS device operation, powering computer equipment, etc. In addition to monitoring and reducing energy usage across equipment types in the store, EMS also provide for a gradual, automated starting-up and stopping of energy usage at the beginning and end of a stores operating hours. These systems also control energy usage to avoid spikes in demand that are costly for both a retailer and the broader energy grid. Recently, some retailers have found ways to supplement store revenues by installing EMS devices that store energy and sell unused portions back to power grid operators during times of peak demand.
While EMS costs have come down dramatically over the last decade, they are far from free. Many retailers struggle to accurately quantify the reductions in power usage attributable to EMS installations and with high up front installation costs, understand the ROI of such investments.
How to improve the ROI of EMS deployments
Any business considering EMS must answer three key questions in order to determine how to move forward with the EMS installations:
- How profitable is the EMS program?
- Do energy savings vary over time?
- How should stores be prioritized and targeted to undergo EMS installations?
To accomplish the above, retailers should use limited-risk trials: install EMS in a small subset of their networks and carefully track EMS performance over time. Measures such as kWh usage and total energy cost should be tracked to understand changes over time. Performance tracking must be done on a test (stores with EMS) vs. control (stores without EMS) basis to carefully account for seasonality, changes in the sales patterns and store operating hours. Using balance of chain control group, while popular, usually is insufficient, and may be misleading as power consumption varies significantly by store.
Instead, test stores should be matched to individually-tailored groups of peer control stores, controlling for fine differences between store types, weather patterns, and fuel types across a network.
Segmentation analysis can then identify store location types that experience larger incremental savings following EMS installations. Data often shows that stores with specific characteristics – related to location, climate, size and utility usage history – are better positioned to benefit from EMS installations. Targeting EMS deployment on a store-by-store or market-by-market basis may save several million dollars for the average retailer.
Read a case study on how convenience retailers and grocers evaluate the effectiveness of Energy Management Systems and maximize ROI by smartly targeting the deployment.